GST success a big boost for PM Modi and pending reforms

The listing of the goods and services tax (GST) constitutional amendment Bill for passage in the Rajya Sabha next week shows a distinct maturity in the NDA ranks in terms of handling of the crucial legislative business in Parliament. This could be a big boost to the government’s plans of bringing in big changes in the labour and other laws that can accelerate investments.

What makes this change in the GST fortune extremely significant is the way PM Modi shifted his government’s approach from initial ‘arrogance’ to the deft handling of non-Congress opposition parties.

The listing of the goods and services tax (GST) constitutional amendment Bill for passage in the Rajya Sabha next week shows a distinct maturity in the NDA ranks in terms of handling of the crucial legislative business in Parliament. This could be a big boost to the government’s plans of bringing in big changes in the labour and other laws that can accelerate investments.

The goods and services tax (GST) appears to be finally heading towards becoming a reality from April 1 next year with the government looking all set to clear the Rajya Sabha hurdle in passing the constitutional amendment Bill next week.

Its listing for passage next week, in itself, is a big gain for the ruling NDA led by prime minister Narendra Modi because the confidence for taking it up in the upper house, where it lacks a majority, is now backed by solid support from the opposition parties, and the Congress has also given strong indications of voting for it.

Thanks to the continuous efforts to placate non-Congress opposition parties like TMC, NCP, SP, JD(U), BJD and AIADMK, the Congress has been facing the threat of getting isolated in this case as even the left parties are supporting the GST.

The all-round support for the GST that the government received at the meeting of the empowered committee of state finance ministers earlier this week surely helped in clinching the crucial support for getting the GST bill passed in the monsoon session.

While the states pressed for the GST rate to be reasonable and also take care of their revenue interests, the meeting paved the way for the Union Cabinet dropping the 1% additional tax on manufacturing and compensation to the states for any revenue loss due to the imposition of the new tax regime for five-years.

It is clear now that the Congress demand of capping the GST rate at 18% in the constitutional amendment Bill will not be pursued as it has not got support from any quarter.

But, it is also equally true that the government will have to find a way out to ensure that the Congress stance of having a mechanism to ensure that the GST rate is not high is reflected in the GST framework in some manner.

This doesn’t appear difficult now with the Congress finding the government’s current approach ‘intense’ and ‘comprehensive’.

What makes this change in the GST fortune extremely significant is the way PM Modi shifted his government’s approach from initial ‘arrogance’ to the deft handling of non-Congress opposition parties and continued deliberations with the Congress on critical legislative business in Parliament, starting with the invite for tea to the Congress president Sonia Gandhi and former prime minister Manmohan Singh for discussing GST, ahead of the winter session.

The listing of the GST constitutional amendment Bill for passage in the Rajya Sabha next week shows a distinct maturity in the NDA ranks in terms of handling of the crucial legislative business in Parliament.

This could be a big boost to the government’s plans of bringing in big changes in the labour and other laws that can accelerate investments if the PM Modi dispensation succeeds in preserving its GST support base, going ahead.